FIN449
Individual Final Project
Introduction:
Valuation can be oversimplified, and frequently is. This, however, does not mean that we should always take the most time-consuming path to valuation. Among the things you have learned this term is that each company is different: They report differently even though they all use GAAP. They create revenue, profits and cash flows differently even though they are all in the same economy (and sometimes in the same sector).
Your project is to value a firm thoroughly, but to simplify your valuation as much as you can without losing clarity in examining the most crucial aspects of the firm. For example, understanding the growth of fixed assets and its relationship to the creation of revenue may require detailed analysis, or a more simple trend forecast may be appropriate. Whether your work is simple or complicated, be aware that if you create unrealistic forecasts, you will be graded down.
Assignment:
Choose a company to value for the final project. The company MUST be publicly traded and based in the USA. I recommend you pick a company which is not in distress and which has at lease 5 years of solid financial performance to examine in your analysis.
For this project, you are not required to model complete financial statements (as in the team project). You should model only those line items crucial to your valuation. At a minimum, you should model the following for at least five years in the future:
· Revenue
· Direct costs
· Depreciation
· Operating income
· Operating assets
· Operating liabilities
· Financial leverage
· Interest expense
You should compare the forecast figures to the past five years and include thorough explanations of your reasoning for each item you model. Use ratio analysis, common-size figures and growth analysis if it helps illustrate your reasoning.
Required:
Value the company using the three DCF methods (FCFE//Ke, FCFF//WACC and APV). Include:
· Detailed computation of FCFF and FCFE
· Detailed explanations of assumptions in your costs of capital
· Comparison of these DCF valuations to other methods, such as PE, EV/EBITDA, etc.
· Identify which value you believe is the true intrinsic value.
· A comparison of your intrinsic equity value per share to the market price per share at the date of interest.
Work will be graded according to the following rubric:
- Process (e.g. documented assumptions, robust analysis, follows accepted steps, etc.)
- Legitimacy (e.g. forecasts are realistic, inputs & outputs make economic sense, follow reasonable patterns, are due to identifiable causal relationships, etc.)
- Technique (e.g. correct computations are chosen, computations are made properly)
- Thoroughness (e.g. Double check results vs other methods: FCFE//Ke, FCFF//WACC, APV, multiples…)
- Completeness (e.g. all required elements are present)
The written portion is a technical discussion of your valuation: Why the method(s) you used for your final valuation opinion ...
FIN449Individual Final ProjectIntroductionValuation can.docx
1. FIN449
Individual Final Project
Introduction:
Valuation can be oversimplified, and frequently is. This,
however, does not mean that we should always take the most
time-consuming path to valuation. Among the things you have
learned this term is that each company is different: They report
differently even though they all use GAAP. They create
revenue, profits and cash flows differently even though they are
all in the same economy (and sometimes in the same sector).
Your project is to value a firm thoroughly, but to simplify your
valuation as much as you can without losing clarity in
examining the most crucial aspects of the firm. For example,
understanding the growth of fixed assets and its relationship to
the creation of revenue may require detailed analysis, or a more
simple trend forecast may be appropriate. Whether your work is
simple or complicated, be aware that if you create unrealistic
forecasts, you will be graded down.
Assignment:
Choose a company to value for the final project. The company
MUST be publicly traded and based in the USA. I recommend
you pick a company which is not in distress and which has at
lease 5 years of solid financial performance to examine in your
analysis.
For this project, you are not required to model complete
financial statements (as in the team project). You should model
only those line items crucial to your valuation. At a minimum,
you should model the following for at least five years in the
future:
2. · Revenue
· Direct costs
· Depreciation
· Operating income
· Operating assets
· Operating liabilities
· Financial leverage
· Interest expense
You should compare the forecast figures to the past five years
and include thorough explanations of your reasoning for each
item you model. Use ratio analysis, common-size figures and
growth analysis if it helps illustrate your reasoning.
Required:
Value the company using the three DCF methods (FCFE//Ke,
FCFF//WACC and APV). Include:
· Detailed computation of FCFF and FCFE
· Detailed explanations of assumptions in your costs of capital
· Comparison of these DCF valuations to other methods, such as
PE, EV/EBITDA, etc.
· Identify which value you believe is the true intrinsic value.
· A comparison of your intrinsic equity value per share to the
market price per share at the date of interest.
3. Work will be graded according to the following rubric:
- Process (e.g. documented assumptions, robust analysis,
follows accepted steps, etc.)
- Legitimacy (e.g. forecasts are realistic, inputs & outputs make
economic sense, follow reasonable patterns, are due to
identifiable causal relationships, etc.)
- Technique (e.g. correct computations are chosen, computations
are made properly)
- Thoroughness (e.g. Double check results vs other methods:
FCFE//Ke, FCFF//WACC, APV, multiples…)
- Completeness (e.g. all required elements are present)
The written portion is a technical discussion of your valuation:
Why the method(s) you used for your final valuation opinion
were the most appropriate, why your inputs and other
assumptions were correct and what areas of uncertainty still
exist. Be sure to state how you are treating these uncertainties:
sensitivity analysis, scenarios, etc. In the write-up, you must
explain why there is a difference between the intrinsic value
you compute and the market price and the significance (if any)
of this difference.
I would expect a four-page detailed defense of your analysis,
plus any spreadsheets, exhibits and anecdotal evidence which
supports your case. The write-up is graded based on the rigor of
your analysis, so be thorough. The basic outline of the write-up
should follow Fernandez’ grid (see attached).
Student CopyIntelIncome StatementFor year ended
4. 12/31/201420102011201220132014FC2015FC2016FC2017FC20
18FC2019Hist CAGRFC CAGRNOTESRevenue$ 43,623.0$
53,999.0$ 53,341.0$ 52,708.0$ 55,870.0$ 59,054.6$
62,420.7$ 65,978.7$ 69,739.5$
73,714.66.38%5.70%COGS15,132.020,242.020,190.021,187.020
,261.0$ 22,025.7$ 23,281.2$ 24,608.2$ 26,010.9$
27,493.57.57%5.70%Gross
profit28,491.033,757.033,151.031,521.035,609.037,028.839,139
.541,370.443,728.646,221.15.73%5.70%R&D6,576.08,350.010,
148.010,611.011,537.015.09%ERROR:#DIV/0!Amortization of
acquisition-related
intangibles18.0260.0308531.0589.0139.17%ERROR:#DIV/0!M
G&A6,309.07,670.08,057.08,088.08,136.020,669.121,847.223,0
92.524,408.825,800.16.56%5.70%Operating
income15,588.017,477.014,638.012,291.015,347.016,359.717,2
92.218,277.919,319.720,421.0-0.39%5.70%Gain on sale of
investments348.0112.0141.0471.0411.0-0-0-0-0-
04.25%ERROR:#DIV/0!Earnings before interest and taxes
(EBIT)15,936.017,589.014,779.012,762.015,758.016,359.717,29
2.218,277.919,319.720,421.0-0.28%5.70%Interest expense,
net109.0192.094.0(151.0)43.00- 0- 0- 0- 0- 0-
20.75%ERROR:#DIV/0!Earnings before
taxes16,045.017,781.014,873.012,611.015,801.016,359.717,292.
218,277.919,319.720,421.0-0.38%5.70%Income tax
expense4,581.004,839.03,868.02,991.04,097.004,237.174,478.6
94,733.985,003.815,289.03-2.75%5.70%Net income$
11,464.00$ 12,942.00$ 11,005.00$ 9,620.00$ 11,704.00$
12,122.57$ 12,813.55$ 13,543.93$ 14,315.93$
15,131.940.52%5.70%IntelBalance SheetFor year ended
12/31/201420102011201220132014FC2015FC2016FC2017FC20
18FC2019Hist CAGRFC CAGRNOTESCash and Cash
Equivalents$ 5,498.0$ 5,065.0$ 8,478.0$ 5,674.0$
2,561.0$ 1,086.6$ 13,318.1$ 25,503.0$ 37,615.6$
49,626.7-17.39%159.97%from statement of cash flowsShort-
term investments$ 11,294.0$ 5,181.0$ 3,999.0$ 5,972.0$
2,430.0$ 2,430.0$ 2,430.0$ 2,430.0$ 2,430.0$ 2,430.0-
7. equity49,430.045,911.051,203.058,256.056,777.068,025.580,87
9.294,465.6108,826.3124,005.63.53%16.20%Total Liabilities +
Shareholders'
Equity63,186.071,119.084,351.092,358.091,956.090,438.2104,2
92.0118,937.2134,419.2150,785.99.83%13.63%check for
imbalance-0-0-0-0-
0105,675.5118,514.3131,745.8145,405.5159,532.5IntelStatemen
t Of Cash FlowsFor year ended
12/31/201420102011201220132014FC2015FC2016FC2017FC20
18FC2019Hist CAGRFC CAGRNOTESCash flows from
operations (DIRECT)Cash collections from customersrevenue -
increase in receivablesLESS:Cash paid for merchandiseCOGS +
increase in inventory - increase in payablesCash paid for
MG&ASG&A - depreciation - increase in accrualsCash paid for
interestInterest expense adjusted for interest payableCash paid
for income taxesIncome tax expense adjusted for deferred tax
liabilityNet cash provided (used) by operating activitiesCash
flows from operations (INDIRECT)Net income$ 11,464.0$
12,942.0$ 11,005.0$ 9,620.0$ 11,704.0$ 12,122.6$
12,813.6$ 13,543.9$ 14,315.9$ 15,131.90.52%5.70%starting
lineAdjustments to reconcile net income to net cash provided by
operating activitiesnon-cash, add backDepreciation
expense4,398.05,141.06,357.06,790.07,380.07,380.07,380.07,38
0.07,380.07,380.013.82%0.00%non-cash, add backShare-based
compensation917.01,053.01,102.01,118.01,148.05.78%non-
operating, subtract if gainRestructuring, asset impairment, and
net loss on retirement of assets67.096.0-
0240.0295.044.86%decrease = sourceExcess tax benefit from
share-based payment
arrangements(65.0)(37.0)(142.0)(49.0)(122.0)17.05%increase =
useAmortization of
intangibles240.0923.01,165.01,242.01,169.01,169.01,169.01,16
9.01,169.01,169.048.56%0.00%increase = source(Gains) losses
on equity method investments, net(117.0)
Gilbert H. Nguyen: This and other (gains) losses on other equity
8. investments, net are combined in 2011
In 2012, same thing.(112.0)(141.0)(425.0)(354.0)31.89%(Gains)
losses on other equity investments, net(231.0)-0-0-0decrease =
use(Gains) losses on divestitures-0(164.0)-0-0Deferred
taxes(46.0)790.0(242.0)(900.0)(703.0)97.72%Changes in assets
and liabilitiesTrading assets-0-0-0-0-0Short-term Investments
(not in original 10K)-0-0-0-0-0ERROR:#DIV/0!Deferred Tax
Assets (not in original 10K)-0-0-0-0-0ERROR:#DIV/0!Other
Current Assets (not in original
10K)(172.0)(181.8)(192.2)(203.2)(214.7)5.70%Accounts
receivable(584.0)(678.0)(176.0)271.0(861.0)(252.3)(266.7)(281.
9)(298.0)(315.0)10.19%5.70%Inventories(806.0)(243.0)(626.0)5
63.0(98.0)(243.6)(257.4)(272.1)(287.6)(304.0)-
40.95%5.70%Accounts
payable407.0596.067.0267.0(249.0)156.6165.6175.0185.0195.5-
11.56%5.70%Accrued compensation and
benefits161.0(95.0)192.0155.04.0162.1169.6177.5185.8194.5-
60.30%4.66%Income taxes payable and
receivable53.0660.0229.01,019.0(286.0)52.41%Other assets and
liabilities834.0
Gilbert H. Nguyen: In 2012, 2011 and 2010 numbers are added
with restructuring ($67 and $96).91.094.0865.01,391.0-0
Gilbert Nguyen: Gilbert Nguyen:
Use other accrued liability from current liabilities-0-0-0-
013.64%ERROR:#DIV/0!Accrued Advertising (not in original
10K)71.098.3107.1116.8127.315.71%Deferred Income (not in
original 10K)125.7132.8140.4148.4156.95.70%Net cash
provided (used) by operating
activities16,692.020,963.018,884.020,776.020,418.020,519.021,
222.921,946.822,712.123,521.45.17%3.47%Cash flows from
investing activitiesAdditions to
PPE(5,207.0)(10,764.0)(11,027.0)(10,711.0)(10,105.0)(7,173.8)
(7,819.5)(8,523.2)(9,290.3)(10,126.4)18.03%9.00%Acquisitions
9. , net of cash
acquired(218.0)(8,721.0)(638.0)(925.0)(934.0)(619.1)
Gilbert Nguyen: Gilbert Nguyen:
Goodwill(654.4)(691.7)(731.1)(772.8)43.87%5.70%Purchases
of available-for-sale
investments(17,675.0)(11,230.0)(8,694.0)(12,493.0)(7,007.0)-
20.65%Sale of available-for-sale
investments506.09,076.02,282.0934.01,227.024.79%Maturities
and sales of available-for-sale investments12,627.0
Gilbert H. Nguyen: Combined with sales of available-for-sale
investments in 201011,029.05,369.08,336.08,944.0-
8.26%Purchases of trading
assets(8,944.0)(11,314.0)(16,892.0)(16,718.0)(14,397.0)-0
Gilbert Nguyen: Gilbert Nguyen:
Seems to be from current assets: Trading Assets line item. Will
only use this line instead of purchases and maturity and sales to
calculate trading assets.
Gilbert H. Nguyen: Later 10K's put long-term income taxes
payable into this section
Gilbert H. Nguyen: This and other (gains) losses on other equity
investments, net are combined in 2011
In 2012, same thing.
Gilbert Nguyen: Gilbert Nguyen:
Use other accrued liability from current liabilities-0-0-0-
012.64%ERROR:#DIV/0!Maturities and sales of trading
assets8,846.011,771.015,786.013,677.013,165.010.45%sale =
sourceOrigination of loans
receivable(498.0)(206.0)(216.0)(200.0)-0-100.00%Collection of
loans receivable-0134.0149.0132.0purchase = useInvestments in
10. non-marketable equity
investments(393.0)(693.0)(475.0)(440.0)(1,377.0)36.82%Return
of equity method investments199.0263.0137.045.0-
100.00%Proceeds from the sale of IM Flash Singapore...
(2012)605.0-0Purchaes of licensed technology and
patents(815.0)(36.0)(92.0)Proceeds from divestitures-050.0-
0Other investing218.0304.0369.0
Gilbert H. Nguyen: Separates out purchases of licensed
technology and patents into its own section. In previous years,
it was a net amount in other investing.326.0671.0
Gilbert H. Nguyen: Includes collections of loans receivable and
return of equity method investments in this year's
calculations.32.45%Marketable Equity Securities (not in
original 10K)-0-0-0-0-0ERROR:#DIV/0!Other Long-term
Investments (not in original
10K)(115.3)(121.9)(128.8)(136.2)(143.9)5.70%Identified
Intangible Asset (not in original 10K)
Gilbert Nguyen: Gilbert Nguyen:
Seems to be R&D from acquired
businesses(253.4)(267.9)(283.1)(299.3)(316.3)5.70%Other
Long-term Assets (not in original
10K)(374.0)(395.3)(417.8)(441.6)(466.8)5.70%Net cash
provided (used) by investing
activities(10,539.0)(10,301.0)(14,060.0)(18,073.0)(9,905.0)(8,5
35.6)(9,258.9)(10,044.7)(10,898.5)(11,826.3)-1.54%8.49%Cash
flows from financing activitiesissuance = sourceIncrease
(decrease) in short-term debt,
net23.0209.065.0(31.0)235.0(1,604.0)-0-0-0-078.79%-
100.00%repayment = useProceeds from government
grants79.0124.063.0129.0104.07.12%Excess tax benefit from
share-based payment
arrangements65.037.0142.049.0122.017.05%Issuance of long-
term debt-04,962.06,124.0-0-0(12,107.0)-0-0-0-
11. 0ERROR:#REF!Repayment of debt(157.0)-0(125.0)-0proceeds =
sourceProceeds from sales of shares through employee equity
incentive
plans587.02,045.02,111.01,588.01,660.029.68%useRepurchase
of common
stock(1,736.0)(14,340.0)(5,110.0)(2,440.0)(10,792.0)
Gilbert H. Nguyen: Includes restricted stock units for previous
years. In 2014, they are separated.
Gilbert H. Nguyen: Includes collections of loans receivable and
return of equity method investments in this year's calculations.
Gilbert H. Nguyen: Combined with sales of available-for-sale
investments in 2010
Gilbert Nguyen: Gilbert Nguyen:
Goodwill57.90%Restricted stock unit
witholdings(332.0)usePayment of dividends to
stockholders(3,503.0)(4,127.0)(4,350.0)(4,479.0)(4,409.0)5.92
%Collateral Associated with repurchase of common
stock(325.0)Increase in liability due to collateral associated
with repurchase of common stock325.0Other financing-
0(10.0)(328.0)(314.0)(199.0)Long-term Deferred Tax liabilities
(not in original 10K)215.2227.4240.4254.1268.65.70%Other
long-term liabilities (not in original 10K)- 0- 0- 0- 0-
0ERROR:#DIV/0!Common Stock (not in original 10K)- 0- 0- 0-
0- 0ERROR:#DIV/0!Accumulated other comprehensive income
(loss) (not in original 10K)38.040.142.444.847.45.70%Net cash
provided (used) by financing
activities(4,642.0)(11,100.0)(1,408.0)(5,498.0)(13,611.0)(13,45
7.9)267.6282.8298.9316.030.86%-60.86%Effect of exchange
rate fluctuations on cash and cash equiv.-
05.0(3.0)(9.0)(15.0)Net increase in
cash1,511.0(433.0)3,413.0(2,804.0)(3,113.0)(1,474.4)12,231.61
2,184.912,112.612,011.119.81%68.94%Cash, beginning of
12. year3,987.05,498.05,065.08,478.05,674.02,561.01,086.613,318.
125,503.037,615.69.22%95.77%feeds the balance sheet cash
figureCash, end of year$ 5,498.0$ 5,065.0$ 8,478.0$
5,674.0$ 2,561.0$ 1,086.6$ 13,318.1$ 25,503.0$
37,615.6$ 49,626.7-17.39%159.97%Noncash investing and
financing activitiesIssuance of common stock for
PP&ENOTESCommon-size Income
Statement20102011201220132014FC2015FC2016FC2017FC201
8FC2019Revenue100.00%100.00%100.00%100.00%100.00%10
0.00%100.00%100.00%100.00%100.00%COGS34.69%37.49%3
7.85%40.20%36.26%37.30%37.30%37.30%37.30%37.30%Gross
profit65.31%62.51%62.15%59.80%63.74%62.70%62.70%62.70
%62.70%62.70%R&D15.07%15.46%19.02%20.13%20.65%0.00
%0.00%0.00%0.00%0.00%Amortization of acquisition-related
intangibles0.04%0.48%0.58%1.01%1.05%0.00%0.00%0.00%0.0
0%0.00%MG&A14.46%14.20%15.10%15.34%14.56%35.00%35
.00%35.00%35.00%35.00%Operating
income35.73%32.37%27.44%23.32%27.47%27.70%27.70%27.7
0%27.70%27.70%Gain on sale of
investments0.80%0.21%0.26%0.89%0.74%0.00%0.00%0.00%0.
00%0.00%Earnings before interest and taxes
(EBIT)36.53%32.57%27.71%24.21%28.20%27.70%27.70%27.7
0%27.70%27.70%Interest expense, net0.25%0.36%0.18%-
0.29%0.08%0.00%0.00%0.00%0.00%0.00%Earnings before
taxes36.78%32.93%27.88%23.93%28.28%27.70%27.70%27.70
%27.70%27.70%Income tax
expense10.50%8.96%7.25%5.67%7.33%7.18%7.18%7.18%7.18
%7.18%Net
income26.28%23.97%20.63%18.25%20.95%20.53%20.53%20.5
3%20.53%20.53%NOTESCommon-size Balance
Sheet20102011201220132014FC2015FC2016FC2017FC2018FC
2019Cash and Cash
Equivalents9%7%10%6%3%1%6%10%13%16%Short-term
investments18%7%5%6%3%1%1%1%1%1%Trading
Assets8%6%7%9%10%5%4%4%3%3%Receivables,
net5%5%5%4%5%2%2%2%2%2%Inventory6%6%6%5%5%2%2
13. %2%2%2%Deferred tax
assets2%2%3%3%2%1%1%1%1%1%Other current
assets3%2%3%2%3%2%2%1%1%1%Total current
assets50%36%37%35%30%14%18%21%23%25%PP&E,
gross80%82%78%79%87%44%43%41%40%40%Accumulated
depreciation-52%-48%-45%-45%-51%-25%-24%-24%-23%-
23%PP&E,
net28%33%33%34%36%70%67%65%63%62%Marketable
equity securities2%1%5%7%8%4%3%3%3%2%Other long-term
investments5%1%1%2%2%1%1%1%1%1%Goodwill7%13%12%
11%12%6%5%5%5%5%Identified intangible assets,
net1%9%7%6%5%2%2%2%2%2%Other Long-term
assets7%7%5%6%7%4%3%3%3%3%Total
Assets100%100%100%100%100%100%100%100%100%100%S
hort-term debt0%0%0%0%2%0%0%0%0%0%Accounts
payable4%4%4%3%3%1%1%1%1%1%Accrued compensation
and benefits5%4%4%3%4%2%2%2%1%1%Accrued
advertising2%2%1%1%1%1%1%1%1%1%Deferred
income1%3%2%2%2%1%1%1%1%1%Other accrued
liabilties3.73%3.96%4.32%4.42%5.32%2%2%2%2%2%Total
current liabilities15%17%15%15%17%8%7%6%6%6%Long-
term income taxes payable0%0%0%0%0%0%0%0%0%0%Long-
term debt3%10%16%14%13%0%0%0%0%0%Long-term
deferred tax liabilities1%4%4%5%4%2%2%2%2%2%Other
long-term liabilities2%5%4%3%4%2%2%2%1%1%Total
liabilities22%35%39%37%38%11%11%10%9%9%Temporary
Equity0%0%0%0%1%0%0%0%0%0%Preferred
Stock0%0%0%0%0%0%0%0%0%0%Common
Stock26%24%23%23%24%11%10%9%8%7%Accumulated other
comprehensive income (loss)1%-1%-
0%1%1%0%0%0%0%0%Retained
earnings52%42%38%38%36%23%26%29%31%33%Total
shareholders'
equity78%65%61%63%62%35%36%38%39%40%Total
Liabilities + Shareholders'
Equity100%100%100%100%100%46%47%47%48%49%NOTES
14. Growth of Income Statement
Items20102011201220132014FC2015FC2016FC2017FC2018FC
2019GeoAvg HistGeoAvg FCRevenue23.8%-1.2%-
1.2%6.0%5.7%5.7%5.7%5.7%5.7%6%6%COGS33.8%-
0.3%4.9%-4.4%8.7%5.7%5.7%5.7%5.7%8%6%Gross
profit18.5%-1.8%-
4.9%13.0%4.0%5.7%5.7%5.7%5.7%6%5%R&D27.0%21.5%4.6
%8.7%-
100.0%ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!ERRO
R:#DIV/0!15%ERROR:#DIV/0!Amortization of acquisition-
related intangibles1344.4%18.5%72.4%10.9%-
100.0%ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!ERRO
R:#DIV/0!139%ERROR:#DIV/0!MG&A21.6%5.0%0.4%0.6%15
4.0%5.7%5.7%5.7%5.7%7%26%Operating income12.1%-
16.2%-16.0%24.9%6.6%5.7%5.7%5.7%5.7%-0%6%Gain on sale
of investments-67.8%25.9%234.0%-12.7%-
100.0%ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!ERRO
R:#DIV/0!4%ERROR:#DIV/0!Earnings before interest and taxes
(EBIT)10.4%-16.0%-13.6%23.5%3.8%5.7%5.7%5.7%5.7%-
0%5%Interest expense, net76.1%-51.0%-260.6%-128.5%-
100.0%ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!ERRO
R:#DIV/0!-21%ERROR:#DIV/0!Earnings before taxes10.8%-
16.4%-15.2%25.3%3.5%5.7%5.7%5.7%5.7%-0%5%Income tax
expense5.6%-20.1%-22.7%37.0%3.4%5.7%5.7%5.7%5.7%-
3%5%Net income12.9%-15.0%-
12.6%21.7%3.6%5.7%5.7%5.7%5.7%1%5%0%0%NOTESGrowt
h of Balance Sheet
Items20102011201220132014FC2015FC2016FC2017FC2018FC
2019GeoAvg HistGeoAvg FCCash and Cash Equivalents-
7.88%67.38%-33.07%-54.86%-
57.57%1125.71%91.49%47.49%31.93%-17%81%Short-term
investments-54.13%-22.81%49.34%-
59.31%0.00%0.00%0.00%0.00%0.00%-32%0%Trading Assets-
9.86%23.83%48.48%7.37%0.00%0.00%0.00%0.00%0.00%15%0
%Receivables, net27.31%5.01%-
6.55%23.59%5.70%5.70%5.70%5.70%5.70%11%6%Inventory9.
17. Ratios & Other
Figures20102011201220132014FC2015FC2016FC2017FC2018F
C2019% chg Hist% chg
FCGM0.65310.62510.62150.59800.63740.62700.62700.62700.6
2700.6270OM0.35730.32370.27440.23320.27470.27700.27700.
27700.27700.2770Pm0.26280.23970.20630.18250.20950.20530.
20530.20530.20530.2053TAT0.69040.75930.63240.57070.6076
0.30110.28020.26320.24920.2375EM1.27831.54911.64741.5854
1.61961.32951.28951.25911.23521.2160ROE0.23190.28190.214
90.16510.20610.17820.15840.14340.13150.1220ROA0.18140.1
8200.13050.10420.12730.06180.05750.05400.05120.0488d0.305
60.31890.39530.46560.3767- 0- 0- 0- 0-
0b0.69440.68110.60470.53440.62331.00001.00001.00001.00001
.0000Alternative to Retention Ratio= Change in
RE/NI(0.2719)0.48090.7332(0.1264)0.92791.00311.00311.0031
1.0031SGR0.16110.19200.13000.08820.12850.17820.15840.143
40.13150.1220IGR0.12600.12390.07890.05570.07930.06180.05
750.05400.05120.0488TIE91.6094157.2234(84.5166)366.4651E
RROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/
0!ERROR:#DIV/0!DOL5.49294.31463.70770.96650.31800.2770
0.27700.27700.2770EPS2.42062.73272.32372.03132.47132.559
72.70562.85983.02283.1951Days in sales in
cash23.988624.671826.228324.805228.921728.921728.921728.9
21728.921728.9217Inventory Turnover= COGS/Avg
Inv5.15524.57304.75794.79835.01185.01185.01185.01185.0118
Receivables
Turnover16.5714.2614.2213.9512.9712.9712.9712.9712.97Purc
hases$20,581$20,828$20,625$20,362$22,269$23,539$24,880$2
6,299$27,798Payables
turnover7.856.976.887.127.887.887.887.887.88Day In
Inventory70.8079.8276.7176.0772.8372.8372.8372.8372.83Days
in
receivables22.0325.6025.6726.1628.1428.1428.1428.1428.14Op
erating
Cycle78.6586.7883.6083.1980.7180.7180.7180.7180.71Days In
Payable 46.5252.3953.0251.2446.3246.3246.3246.3246.32Cash
18. Cycle32.1334.3930.5831.9534.3834.3834.3834.3834.38D/E
Ratio28%55%65%59%62%33%29%26%24%22%ASSUMPTION
S20102011201220132014FC2015FC2016FC2017FC2018FC2019
Sales growth5.70%5.70%5.70%5.70%5.70%COGS as % of
sales37.30%37.30%37.30%37.30%37.30%MG&A
35%35%35%35%35%ETR (Effective Tax Rate) constant
25%0.285510.272140.260070.237170.2592925.90%25.90%25.9
0%25.90%25.90%Gain on sale of investments forecast as zero
for all future years00000Cash forecast on balance sheet will
come from Statement of Cash FlowsPP&E grows % per
year9%9%9%9%9%LT investments remains flat (i.e. no
change)All other assets & liabilities grow at same rate as
salesDepreciation as % of PPE,
gross57.5%57.5%57.5%57.5%57.5%Interest expense forecast
based on debt and these interest rates: ST interest = %, LT
interest = %Capital stock remains flatRetained earnings grows
based on NI & dividends paidDividend payout ratio remains
constantThere are shares outstanding for all years (historic and
forecast)R&D AdjustmentST interest
rate1.95%1.95%1.95%1.95%1.95%LT Interest
rate4.80%4.80%4.80%4.80%4.80%Accrued
Advertising9%9%9%9%9%Shares
Outstanding4736473647364736473647364736473647364736His
t CAGRFC CAGRNOTESCASH FLOW
COMPUTATIONS20102011201220132014FC2015FC2016FC20
17FC2018FC2019Sales53,99953,34152,70855,87059,05562,421
65,97969,73973,7151.14%5.70%Operating
Margin32.37%27.44%23.32%27.47%27.70%27.70%27.70%27.7
0%27.70%-5.32%0.00%Operating
Income17,47714,63812,29115,34716,36017,29218,27819,32020,
421-4.24%5.70%Tax
Rate27.21%26.01%23.72%25.93%25.90%25.90%25.90%25.90%
25.90%-
1.60%0.00%NOPAT12,72110,8319,37611,36812,12312,81413,5
4414,31615,132-3.68%5.70%Dep
Exp5,1416,3576,7907,3807,3807,3807,3807,3807,38012.81%0.0
19. 0%OCF17,861.7317,188.1216,165.9018,747.7219,502.5720,193.
5520,923.9321,695.9322,511.941.63%3.65%Cash For CapEx
19,435.011,665.011,636.011,039.07,792.98,473.89,214.910,021.
410,899.2-17.18%8.75%Cash Reinvested in non-cash, NOWC
((Ca-cash)-(CL-Non-
op))(1,183.0)1,356.0(1,900.0)551.0125.3130.8136.5142.3148.1-
177.52%4.28%FCFF(390.3)4,167.16,429.97,157.711,584.411,58
8.911,572.511,532.311,464.6-363.72%-
0.26%FCFF(390.3)4,167.16,429.97,157.711,584.411,588.911,57
2.511,532.311,464.6-363.72%-0.26%Change In
Debt5,171.06,064.0(31.0)235.0(13,711.0)-0-0-0-0-64.31%-
100.00%Interest (1-t)139.769.6(115.2)31.9-0-0-0-0-0-
38.92%ERROR:#DIV/0!Preferred Cash Flows (Dividends)-0-0-
0-0-0-0-0-0-
0FCFE4,641.010,161.66,514.17,360.9(2,126.6)11,588.911,572.5
11,532.311,464.616.62%ERROR:#NUM!2010201120122013201
4FC2015FC2016FC2017FC2018FC2019VALUATION
SUMMARYFCFE
Method012345FCFE(2,126.6)11,588.911,572.511,532.311,464.6
gKePVTerminal ValueEquity Intrinsic ValuePer Share
ValueFCFF
Method012345FCFF11,584.411,588.911,572.511,532.311,464.6
gWACCPVTerminal ValueDebtEquity Intrinsic ValuePer Share
ValueAPV
Method012345FCFF11,584.411,588.911,572.511,532.311,464.6
gKuPVTerminal ValueTotalInterest Expense-0-0-0-0-0tTax
savingsgKuPVTerminal ValueTotalTotal of PVsDebtEquity
Intrinsic ValuePer Share ValueP/E ValuationComparable
P/EEarnings Available to Common Shareholders$ 12,122.57$
12,813.55$ 13,543.93$ 14,315.93$ 15,131.94Implied Equity
Value per ShareP/S ValuationComparable P/SRevenue$
59,054.6$ 62,420.7$ 65,978.7$ 69,739.5$ 73,714.6Implied
Equity Value per ShareEV/EBITDA Ratio ValuationComparable
EV/EBITDAEBITDAValue of OperationsNon-operating Assets
+Market Value of Debt -Intrinsic Value per ShareBottom Up
BetaD/E RatioRevenueBetaUnlevered BetaWeightB- WeightRe-
20. LeveredSum of BetaRelevered for
IntelIntel0.6555,8700.90.550.540.300.480.701.03Qualcomm0.25
26,4871.351.090.250.280.34texas
instruments0.7112,2051.260.750.120.090.15Nvidia0.634,1301.4
50.900.040.040.06AMD19.145,5062.340.120.050.010.12104,19
8
&F